The International Monetary Fund (IMF) has expressed its readiness to engage with Pakistan’s new government in formulating a new economic program, following delays in the formation of a coalition government after the recent General Elections.
Julie Kozack, the IMF’s Director of Strategic Communications, stated that the IMF stands ready to send a mission for the second review of the Stand-by Arrangement (SBA) after the formation of a new cabinet. The focus remains on completing the current SBA program, which concludes in April 2024.
She emphasized the importance of working with the new government to ensure macroeconomic stability and highlighted the significant role of the caretaker government in maintaining economic stability during the transition period.
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IMF’s Perspective and Expectations
Kozack provided insights into the IMF’s assessment of Pakistan’s external financial needs for 2024, noting that the IMF Executive Board approved the first review of the SBA, resulting in disbursements of approximately $1.9 billion. She commended the caretaker government for adhering to fiscal targets, maintaining a tight monetary policy stance, and implementing timely adjustments in tariffs to bolster the energy sector’s viability.
She refrained from commenting on political matters but reiterated the IMF’s commitment to assisting Pakistan in achieving stability and economic resilience for the benefit of its citizens.
Economic Challenges and Prospects
Pakistan faces significant economic challenges, including inflation, currency devaluation, and shrinking foreign reserves. The delay in forming a coalition government has further complicated the situation, necessitating prompt engagement with the IMF to address economic issues effectively.
The IMF’s willingness to support Pakistan’s economic program signals a positive step towards addressing the country’s financial concerns and fostering sustainable growth. Despite the uncertainties, Pakistan’s sovereign dollar bonds have shown resilience, reflecting investor confidence in the country’s economic prospects.